How to Split Up the Willed Family Home

The most popular final directive in many a last will and testament reads: My estate shall be divided equally among my children.

But what happens when most, if not all, of an estate's assets are real property, most commonly the family home? How do you divide that three ways?

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In a best-case scenario, the siblings would agree unanimously on a fair and equitable settlement: Sell the home and split the proceeds, distribute other assets so one heir retains the property or negotiates buyouts for those wanting cash.

But best-case scenarios can be as elusive as family harmony when the second parent dies, according to Katherine Tennyson, chief probate judge for Multnomah County in Portland, Ore.

"If there is more than one sibling, you usually have very different ideas about what should happen to the family home," she says. "What is stunning to me is that the resentment that has been building over time in a sibling group really comes out after Mom and Dad aren't around anymore. Then people are looking

Executor job not easy

Determining the fate of the family home when both parents have passed can be the most knotty and explosive issue an executor -- also called a personal representative -- will face in executing the terms of a will.

In addition to refereeing what discord exists among siblings and other heirs, you'll almost certainly have to go through regular probate to transfer the deed unless the change of ownership is provided for outside the will via a living trust or similar instrument. A simplified or summary probate that's faster and cheaper is only allowed for "small estates" in most states.

"The dollar limit (for summary probate) varies a lot by state, from just a few thousand dollars up to about $200,000," says attorney Mary Randolph, author of "The Executor's Guide." "If you're going to liquidate a house, you're probably over because it is based on the value of the entire estate."

Retaining counsel is advised, and frequently required, when entering probate, especially if real property is involved or you are unfamiliar with the probate process.

"When you are put as the head of the estate, you have some serious responsibilities and liabilities," says Jonathan Alper, an estate attorney in Heathrow, Fla. In the case of a house, you must maintain the house, keep it insured, make repairs. If you let the insurance lapse and something happens, the executor can be personally liable for negligence."

Because we may only be an executor once in our lives, few of us get any good at it.

Here's what you should know about the particular challenges the family home presents to the executor of an estate.

Wait for court order before acting

Doing anything with estate assets, much less selling a home, before you've been granted authority to do so by the court is one of the biggest mistakes an executor can make.

"The biggest issue is people who make decisions they ought not to be making and take money that doesn't belong to them," says Tennyson. "This includes mixing estate money with personal money, borrowing from the estate or distributing money before ordered to do so by the court. Those are all things that you just shouldn't do, but it gets tempting when you're sitting there with this large bank account."

This is particularly difficult if you have been living with and caring for your parents and their money. Once they're gone, their estate, including their bank accounts, becomes a separate legal entity with its own rights. Be sure to respect that line as executor or you may be liable for misappropriations and inappropriate distributions.

Don't even think about posting a "for sale" sign in the front yard just yet.

"There are certain things you can't do as a personal representative without getting approval from the court, and selling a piece of real estate is one of them," says Tennyson.

The main job: Maintain and organize

Once the will is ruled valid and the executor is selected, several steps follow. You'll be asked to identify and take an inventory of assets and outstanding debts, notify named parties and creditors, and arrange for maintenance of the home until its fate can be determined.

As executor, you have an obligation to maintain the value of the assets in the estate. Expenditures you make from the estate to clean out the house and pay the ongoing mortgage, insurance, utility and maintenance bills are appropriate and will pass court scrutiny on your interim or final accounting. However, a new swimming pool, a $50,000 kitchen remodel or other upgrades almost certainly will not.

"Generally, your prime directive as an executor is to keep things from losing value," says Randolph. "It's not like you're a trustee and you're investing to increase the value of the assets. You just don't want to mess up."